German FinMin to Greece: Default If You Must

Here's another fine illustration of parliamentary coalitions being rocky marriages of convenience--especially during difficult times. Angela Merkel's Christian Democratic Union (CDU) is, occasional rhetoric to the contrary, ultimately loyal to the idea of European Monetary Union which earlier generations of its politicians helped bring to life. For the likes of, say, Helmut Kohl, the common currency was arguably not the goal but an instrument for promoting "ever closer union" among European states. On the other hand, the more market-oriented Free Democrat Party is (surprise!) keener--in rhetoric at least--on letting market forces do their thing with Greece. To the likes of the FDP, saving the tangible and psychic benefits Germany has obtained via the euro's introduction--superior access to Western European markets together with no small amount of pride in its existence--are more important than appeasing "wayward" neighbours. Hence, decreasingly close union is not unthinkable.

Almost on cue, German Minister of Economics and Technology Philipp Roesler has just opined that Greek default should be on the table in Die Welt. Alike his similarly youthful predecessor twice removed Karl-Theodor zu Guttenberg who famously resigned from the cabinet after allegations surfaced that his PhD thesis was plagiarized, Roesler has an interesting background. You see, he is a native of (South) Vietnam adopted by German parents after the fall of Saigon. Alike Pope Benedict XVI, he too is a German Roman Catholic. Naturally, I am interested in what an erstwhile Southeast Asian Catholic has to say...

An orderly bankruptcy of Greece is no longer a taboo, German Economy Minister and leader of Chancellor Angela Merkel's junior coalition partner, the Free Democrats (FDP), said on Sunday in an article for a newspaper.

"To stabilise the euro, there can no longer be any taboos. That includes, if necessary, an orderly bankruptcy of Greece if the necessary instruments are available," Philipp Roesler wrote in an article for Die Welt daily. He also demanded automatic sanctions to be imposed on heavily indebted countries which failed to comply with their obligations.

"If there are breaches of the rules, there must be tough requirements ... and if there are continued breaches, a withdrawal of voting rights for a time in the EU Council of Ministers should not be a taboo."

The Stability and Growth Pact+ allusions are commonplace by now, but it's going to be interesting to watch how Merkel and other CDU bigwigs react if its coalition partners' more gung-ho attitude gains momentum even within the coalition itself. Opinion polls in Germany certainly show considerable bailout fatigue. Unlike the CDU, let's just say the younger FDP folks have less to lose from burning bridges to the rest of Europe, less burdened as it is by a pre-Maastricht vision of building bridges in this manner. The weight of history is certainly a sizeable burden to have on your shoulders.